Lease Variations, Extensions & Options

Changing the terms of a lease that is already running — without starting the lease again.

Deeds of variation reviewed or drafted, and registered where the lease is on the title.
Extending a term, extending or varying an option, changing rent, parties, guarantees or permitted use.
Commercial, retail and industrial leases across New South Wales — landlord or tenant.
Registered electronically through PEXA and NSW Land Registry Services.
Fixed fee for a straightforward variation, set out on our pricing page.

Property lawyer reviewing a deed of variation of lease for a landlord and tenant in New South Wales

What a lease variation is

Changing a Lease That Has Already Started

A lease variation is an agreed change to a lease that is already on foot. The lease continues; one or more of its terms is altered. The change is documented in a deed of variation signed by the parties, and where the lease is registered on the title, the variation is registered as well.

In New South Wales, registered leases are varied under section 55A of the Real Property Act 1900 (NSW). A variation may increase or reduce the rent, increase or reduce the period for which the lease has effect, or otherwise vary, omit or add to the provisions of the lease. What it cannot do is change the land the lease covers — a change of premises is a different document.

Most variations are agreed commercially before a lawyer is involved. The parties have already shaken hands on the new rent, the extra years, or the longer option. The legal work is making sure the deed does what the parties think it does, that the consents the register requires are in place, and that the variation is actually capable of being registered against the title.

Corporate Legal provides legal services only — not commercial or valuation advice on whether the varied terms are good value.

What can be varied

The Changes a Variation Can Make

Rent, term, options, parties, security and the operating terms of the lease. The premises themselves cannot be changed by a variation.

Extending the Term

Adding years to a lease that is running, or that has recently expired, without negotiating an entirely new lease. Section 55A expressly allows the period of a registered lease to be increased by variation, which is usually the cleanest way to do it.

Extending or Varying an Option

Lengthening an option term, adding a further option, or changing the window and preconditions for exercising one. Option clauses are read strictly, so this is often the moment to fix wording that would not have worked when the tenant came to use it.

Rent, Reviews & Incentives

Increasing or reducing rent, changing the review mechanism or review dates, documenting an abatement or rent-free period, or recording an agreed incentive. Rent changes are the most common variation and the easiest to record badly.

Parties, Guarantors & Security

Adding or releasing a guarantor, changing a company party after a restructure, or adjusting the bank guarantee or security deposit. Whether an existing guarantor remains bound after a variation depends on the drafting — it is not automatic.

Permitted Use & Operating Terms

Widening or narrowing the permitted use, changing trading hours, outgoings arrangements, signage, fit-out and make-good obligations, or assignment and subletting rights as the tenant’s business changes.

What a Variation Cannot Do

It cannot change the land the lease covers. Adding a storeroom, taking a neighbouring suite or giving back part of the premises is a surrender and a new lease, not a variation — and treating it as a variation is one of the ways these documents fail at lodgement.

Parties already agreed? Send us the lease and the terms and we will tell you which document you need.

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Choosing the right document

Variation, Option Exercise, or a New Lease?

Three different documents solve three different problems, and picking the wrong one is where the cost and the delay come from.

A Deed of Variation

Right where the lease continues and the parties agree to change something in it — the rent, the term, an option, the guarantors, the permitted use. The original lease stays alive and the deed sits on top of it.

Where the lease is registered, the variation is then lodged with NSW Land Registry Services on a variation of lease form so the register reflects the changed terms.

Exercising an Option

An option is a right the tenant already has. It is not varied, it is exercised — by notice, in the form, manner and window the lease specifies, and often only if the tenant is not in breach.

Options are construed strictly and a late or defective notice can lose the further term outright. Where the clause as drafted will not work, the fix is to vary the option before it needs to be used.

A New Lease

Right where the changes are extensive, the premises are changing, the lease has been expired too long to be revived, or the variation would operate at law as a surrender of the old lease and the grant of a new one.

A new lease is more work than a variation, so it is worth knowing which one you are actually doing before anyone starts drafting.

The one from today’s desk

Extending an option term where both parties already agree is a textbook variation: a short deed recording the longer option, the landlord’s mortgagee consenting, and the variation registered against the lease. It is a contained piece of work — provided the title is checked, the consent is obtained and the deed is drafted so the option it creates actually works.

Traps

What Goes Wrong With Lease Variations

An Accidental Surrender and Regrant

At general law, agreeing to extend a term or to change the premises can operate as a surrender of the existing lease and the grant of a new one. That can reset guarantees, disturb priority against the landlord’s mortgagee and, for a retail lease, bring fresh obligations with it. Documenting the change as a registered variation under section 55A is one of the reasons to do it properly.

The Mortgagee’s Consent

A variation of a registered lease is not effective against the holder of a prior registered interest unless that party consented in writing before the variation was registered. In practice that means the landlord’s bank. Consent takes time, the bank usually charges for it, and a variation lodged without it can be rejected or left ineffective where it matters most.

Leaving It Until the Lease Has Ended

A variation generally cannot be registered once the lease has terminated, unless it extends the term so the lease is current again — and even then, an extension cannot be registered more than twelve months after the lease came to an end. Leases that have quietly rolled on past expiry are the ones this catches.

Assuming There Is Something to Register

If the lease was never registered there is no registered lease to vary, and the deed of variation stands on its own. That is often perfectly workable, but it changes what protection the tenant has against a new owner or a mortgagee, and it should be a decision rather than an oversight.

Retail Leases Have Their Own Rules

Under the Retail Leases Act 1994 (NSW), a retail shop lease with a term of more than three years including options must be registered, and the landlord carries the obligation to lodge it. A variation that lengthens a term or an option can push a lease over that line, and retail leases bring disclosure obligations that a commercial lease does not.

The Option You Think You Have

Exercise windows, notice methods, no-breach preconditions and the rent-setting mechanism for the further term all decide whether an option is worth anything. A variation is the natural moment to read the option properly — long before the tenant is standing at the end of the term relying on it.

How we work

How a Lease Variation Works With Us

Send Us the Lease

We start with the current lease, any earlier variations, and a short note of what the parties have agreed. Most of the time the commercial terms are already settled and we are documenting them.

Check the Title and the Lease

We search the title to confirm whether the lease is registered, who the current registered proprietor is, and what prior interests — usually a mortgage — will need to consent. We also read the clause being changed.

Review or Draft the Deed

Either we review the deed the other side has prepared and advise on it, or we draft it. Either way the aim is the same: the change is recorded clearly, the rest of the lease is left intact, and the document is capable of registration.

Obtain the Consents

We identify and request the consents the variation needs — the mortgagee’s, and a head landlord’s where the lease is a sublease. Bank consent fees and turnaround are outside our control, so we start this early and keep you posted.

Sign and Register

The parties sign the deed. Where the lease is registered, we complete the identity verification the register requires and lodge the variation electronically through PEXA and NSW Land Registry Services.

Confirm and Diarise

We confirm the variation has been registered, send you the updated title and the executed documents, and give you the dates that now matter — the new expiry, the new option window and the next review.

A straightforward lease variation is a fixed-fee service, plus disbursements. Reviewing a deed the other side has prepared and registering it is priced separately from drafting the deed ourselves. Both figures are on our pricing page and we confirm the fee in writing before we start.

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Why Corporate Legal

Why Clients Bring Variations to Us

Fixed Fee, Quoted Upfront

A straightforward variation is priced as a fixed fee with the likely disbursements set out, confirmed in writing before we begin. No hourly meter on a two-page deed.

A Lawyer, Not a Form Service

The variation form is the last five minutes of the job. The value is in reading the clause being changed, the clauses it interacts with, and the title behind them.

Both Sides of the Lease

We act for landlords and tenants, so we know what the other side’s deed is likely to be doing and where the drafting usually favours whoever prepared it.

We Check the Title First

Registered or unregistered, who consents, whether the twelve-month window has closed. These are title questions, and they decide what document you can use.

Retail-Aware

Where the lease is a retail shop lease, we check what the change does to registration and disclosure obligations under the Retail Leases Act 1994 (NSW) rather than treating it as an ordinary commercial lease.

Registered Electronically

Variations are lodged through PEXA and NSW Land Registry Services, with identity verification handled as part of the service, so registration is not left hanging.

Have a variation to review, or one to draft? We can usually turn these around quickly.

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Part of a Complete Leasing Service

A variation is usually one step in a longer relationship — the lease we drafted, the option the tenant is about to exercise, the assignment when the business sells, the sale of the building with the lease attached. Because we handle leasing, conveyancing and property disputes, the variation is done with the rest of the picture in view.

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Frequently Asked Questions

What is a deed of variation of lease?

It is a short deed signed by the landlord and the tenant recording an agreed change to a lease that is already running. The original lease continues and stays in force; the deed changes only what the parties have agreed to change. Where the lease is registered on the title, the deed is followed by a variation of lease lodged with NSW Land Registry Services so the register reflects the new terms.

Do we have to register the variation?

Only where the lease itself is registered. If the lease is on the title, the variation should be registered too — otherwise the register continues to show terms that no longer apply, and the change may not bind a future owner or mortgagee. If the lease was never registered there is nothing to lodge and the deed stands on its own. A retail shop lease with a term of more than three years including options must be registered under the Retail Leases Act 1994 (NSW), so a variation that lengthens the term can bring that obligation into play.

Can a variation extend the term of a lease?

Yes. Section 55A of the Real Property Act 1900 (NSW) allows a variation of a registered lease to increase or reduce the period for which the lease has effect, as well as to change the rent or vary, omit or add to any other provision. What a variation cannot do is change the land the lease covers — adding or giving back part of the premises needs a surrender and a new lease.

We want to extend the option, not the term. Is that the same thing?

It is a variation, but a different one. Extending the term adds years the tenant must take; extending or lengthening an option adds years the tenant may take, at their election, if they exercise the option properly. Where both parties agree, varying the option is usually the lighter document and preserves the tenant’s flexibility. We would read the existing option clause first, because it is common to find that the exercise window or the rent mechanism needs fixing at the same time.

Does the landlord’s bank have to agree to a lease variation?

Usually, yes. A variation of a registered lease is not effective against the holder of a prior registered interest unless that party consented in writing before registration, and on most commercial property that means the landlord’s mortgagee. Banks generally charge a fee for consent and can take some weeks, so we identify who needs to consent at the start rather than at lodgement. Obtaining that consent and any bank charges sit outside the fixed fee.

Is stamp duty payable on a lease variation in NSW?

Lease duty was abolished in New South Wales for leases and lease instruments dated on or after 1 January 2008, so a straightforward variation does not attract duty. Where a variation is bound up with something else — a payment for the grant of new rights, or a transaction affecting an interest in land — the duty position should be checked rather than assumed, and we will raise it if we see it.

What if the lease has already expired?

There is a window, and it closes. A variation generally cannot be registered after the lease has terminated unless the variation extends the term so that the lease is current again, and an extension of that kind cannot be registered more than twelve months after the lease came to an end. Leases that have been holding over for a year or more are the common casualty. If the window has closed, a new lease is the answer, so it is worth checking the expiry date before deciding what to prepare.

How much does a lease variation cost, and how long does it take?

A straightforward variation is a fixed-fee service plus disbursements, with reviewing and registering a deed the other side has prepared priced separately from drafting the deed ourselves. The current figures are on our pricing page and we confirm the fee in writing before starting. Disbursements typically cover the title searches and the registration fee. Timing depends less on us than on the consents: where the lease is unencumbered or consent is already in hand, these move quickly; where a bank has to consent, allow several weeks.

This page is general information about lease variations in New South Wales and is not legal advice for your lease. The right document depends on the lease you have.

Agreed the Change? Get It Documented Properly

Most lease variations arrive with the commercial terms already settled and both sides wanting it done without fuss. That is exactly the work this service is built for — check the title, confirm the right document, get the consents moving, and register the variation so the change is on the record. Corporate Legal acts for landlords and tenants on leases across New South Wales.

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